Nissan Motors is cutting production in North America by 20% as it shifts from a strategy that focused on growth and now zeroes in on profits.
The company has slowed production at two plants in the U.S. and three in Mexico as its sales for 2018 are down 6.5%, including a 9.5% drop in March. The losses have come despite aggressive discounting and fleet sales efforts.
Although production is slowing down, the Nikkei said, employees will not be let go. The plants will not be completely shut down and, at some point later this year, production is expected to return to normal levels.
In the U.S., the company aggressively pushed sales of the Altima sedan and Rogue sport-utility vehicle. Sales of the two vehicles were down 9.2% in 2017, after seeing an uptick in 2016.
(Nissan’s operating profits down for 2017, favorable tax rates raise income. Click Here for the story.)
Nissan said that the report was not based on any announcement by the company. U.S. production of Nissan vehicles, including the popular Rogue crossover SUV and its high-volume Altima sedan fell 9.2% in the year ended March, company figures show, following a period of increased sales in 2016.
The move comes solely in response to reduced sales in the U.S. as the automaker rallied to post increases in revenue and net income for 2017. Nissan’s January-March profit was 168.8 billion yen, or $1.5 billion, down from 249 billion yen last year. Quarterly sales fell 0.9% to 3.4 trillion yen, or $31.3 billion.
The automaker reported an operating profit of 574.8 billion yen, or $4.9 billion, on net revenues of 11.95 trillion yen, or $109 billion, equivalent to an operating margin of 4.8%. The operating profit was down from 2016 by 22.6% and margins fell 1.5%, reflective of the tougher conditions in some markets.
(Click Here for more about Renault-Nissan-Mitsubishi taking the global sales lead.)
However, full-year net income rose by 12.6% to 746.9 billion yen, or $6.8 billion, as non-operating income and the favorable impact of U.S. tax reforms more than compensated for the reduction in operating profit.
The automaker earlier this month restated it was moving its U.S. strategy to one of sustained profitability from one which focused on aggressive growth, and that it was lowering plant utilization to enable its dealers to sell down built-up inventories.
Since 2010, Nissan has doubled car sales in North America to around 1.6 million units, which put it in line to meet its goal to hold 10% market share in the U.S.
(To see more about Nissan’s plans to add eight EVs, boost electrified sales to 1M annually, Click Here.)
In addition to its plans to focus on improving profitability in North America, Nissan plans on expanding sales in China, the world’s biggest car market.